Gold prices have surpassed $1500 an ounce, a key psychological barrier for many market participants, and could be on the way to a new milestone five percent or more higher this year.

AP

COMEX June gold futures, the most-active contract, finished the open-outcry session Tuesday just under that threshold, after climbing to $1500.50 an ounce intraday. Some analysts call for gold prices to reach $1,600 or higher by the end of the year.

Since then, a multitude of factors have caused investors to once more flock to gold, propelling prices into record territory. The latest catalyst was S&P's downgrade of the U.S. to negative and warning that it could downgrade the AAA sovereign credit rating if the budget deficit is not dealt within the next two years.

"The downgrade in and of itself means very little short term, but longer term it helps encapsulate the confluence of factors leading to the dollar's demise. To mitigate risk, investors are taking on exposure in hard assets like gold and other commodities," says John Netto, a proprietary trader and founder of M3 Capital, who predicted gold prices had "bottomed" as the metal hit its January low.

U.S. debt concerns are just the beginning. As Barclays analysts noted to clients this morning: "Rising geopolitical tensions across the MENA (Middle East/North Africa) region, uncertainty following the events in Japan, fears of higher inflation, a weaker dollar, the recent resurfacing of European sovereign debt risk, and now heightened concerns over the US have outweighed the recent rate hikes to drive (gold) prices to fresh highs."

Gold prices are poised to go higher, analysts say, but how far and how fast is up to debate. MF Global analyst Tom Pawlicki predicts prices will rise to $1550 in the short-run, while RBC Capital Markets precious metals strategist George Gero worries $1500 gold could serve as a barrier to new buyers.